{"id":284709,"date":"2023-10-23T20:01:05","date_gmt":"2023-10-23T18:01:05","guid":{"rendered":"https:\/\/climatescience.press\/?p=284709"},"modified":"2023-10-23T20:01:09","modified_gmt":"2023-10-23T18:01:09","slug":"beware-the-offshore-wind-oligarchy","status":"publish","type":"post","link":"https:\/\/climatescience.press\/?p=284709","title":{"rendered":"Beware the offshore wind oligarchy"},"content":{"rendered":"\n
\"\"<\/figure>\n\n\n\n

<\/p>\n\n\n\n

Surprise , surprise. In New York the State rejected a large scale request from a bunch of developers for price increases averaging over 50%.<\/em><\/strong><\/p>\n\n\n\n

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From \u00a0CFACT<\/a><\/p>\n\n\n\n

By\u00a0David Wojick<\/a><\/p>\n\n\n\n

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The Atlantic coastal states are painting themselves into a financial corner with offshore wind targets and mandates. These purchase requirements may be creating a seller\u2019s market for offshore power providers. Even worse, given that there are only a handful of developers it may well become an oligopoly market. If so then the question is how high the prices to the states will go?<\/p>\n\n\n\n

This alarming possibility is in sharp contrast to how the situation is being reported. Some developers have bought out their existing power purchase (supply) agreements as uneconomical. In New York the State rejected a large scale request from a bunch of developers for price increases averaging over 50%<\/em><\/strong>, on the grounds that it violated their competitive procurement policy.<\/p>\n\n\n\n

These events have been reported as serious setbacks for the industry, but in every case the developers are expected to rebid the PPAs at much higher prices. In fact these States are rushing to get new procurements underway. Other states are doing likewise.<\/p>\n\n\n\n

The New York developers can hardly be expected to bid lower than they already asked for, as that would suggest their ask was dishonest. They may well bid higher, arguing that their costs have continued to increase. Developers for other states are likely to want similar amounts.<\/p>\n\n\n\n

The driver here may be the huge targets already set by the states. Reports often cite the Biden target of 30,000 MW but the combined state targets are much bigger. Just New York, New Jersey and Virginia sum to over the Biden target. The combined targets from Maine to North Carolina exceed a whopping 50,000 MW of offshore wind capacity.<\/p>\n\n\n\n

Given the huge targets the question is how high a price will these states eat? If I were the developers I would come in very high. As the saying goes, it is easy to go down but hard to go up.<\/p>\n\n\n\n

Not only is it a mandated seller\u2019s market, it has the makings of an oligopoly. These are short term procurements so the only viable bidders are those ready to build. That is a very small number of developers, perhaps a dozen or so, if that. For each state there may only be a very small number that can deliver to them.<\/p>\n\n\n\n

There are lots of leases but it takes 5 years or more to get to the construction stage. Even though the Environmental Impact Statements are a cruel joke on the environment, they still require a lot of research. Smoke and mirrors take time to build.<\/p>\n\n\n\n

So I would not be surprised if the bids on the first state\u2019s procurement were very high and they kept getting higher, state by state and procurement by procurement. Of course the states will scream and squawk. They may even reject these high prices at first, but they have huge targets and mandates to meet. The developers are mostly big, global companies so they can afford to take their time, holding out for their high prices.<\/p>\n\n\n\n

This particular issue storm is going to be very interesting. Nor will it be over quickly. Green politics meets green business head on. We are talking about something like $200 billion in offshore wind projects. A titanic struggle.<\/p>\n\n\n\n

Of course it is possible the states will simply ditch the targets, or slip them harmlessly into the future, so they can repeatedly reject the high bids. This might even wipe out offshore wind, which is what it deserves. Watching that happen, perhaps even helping it along, could be great fun.<\/p>\n\n\n\n

Stay tuned to CFACT as this wacky green drama unfolds.<\/p>\n\n\n\n

Author<\/h2>\n\n\n
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David Wojick<\/a><\/p>\n\n\n\n

David Wojick, Ph.D. is an inDr. David Wojick is an independent policy analyst and senior advisor to CFACT.<\/p>\n\n\n\n

As a civil engineer with a Ph.D. in logic and analytic philosophy of science, he brings a unique perspective to complex policy issues. <\/p>\n\n\n\n

His specializes in science and technology intensive issues, especially in energy and environment.<\/p>\n\n\n\n

As a cognitive scientist he also does basic research on the structure and dynamics of complex issues and reasoning. <\/p>\n\n\n\n

This research informs his policy analyses. He has written hundreds of analytical articles. <\/p>\n\n\n\n

Many recent examples can be found at https:\/\/www.cfact.org\/author\/dwojick\/<\/a> Often working as a consultant on understanding complex issues, Dr. Wojick’s numerous clients have included think tanks, trade associations, businesses and government agencies. <\/p>\n\n\n\n

Examples range from CFACT to the Chief of Naval Research and the Energy Department’s O\ufb03ce of Science. <\/p>\n\n\n\n

He has served on the faculty of Carnegie Mellon University and the sta\ufb00 of the Naval Research Laboratory. <\/p>\n\n\n\n

He is available for con\ufb01dential consulting, research and writing.<\/p>\n\n\n\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

Surprise , surprise. In New York the State rejected a large scale request from a bunch of developers for price increases averaging over 50%. From \u00a0CFACT By\u00a0David Wojick The Atlantic coastal states are painting themselves into a financial corner with offshore wind targets and mandates. These purchase requirements may be creating a seller\u2019s market for […]<\/p>\n","protected":false},"author":121246920,"featured_media":284714,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_coblocks_attr":"","_coblocks_dimensions":"","_coblocks_responsive_height":"","_coblocks_accordion_ie_support":"","_crdt_document":"","advanced_seo_description":"","jetpack_seo_html_title":"","jetpack_seo_noindex":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"Surprise , surprise. In New York the State rejected a large scale request from a bunch of developers for price increases averaging over 50%.","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[1],"tags":[691823929,691818867,691823928,691822369,691822945],"class_list":{"0":"post-284709","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","6":"hentry","7":"category-uncategorized","8":"tag-green-politics","9":"tag-new-york","10":"tag-offshore-power-providers","11":"tag-offshore-wind-energy","12":"tag-price-increases","14":"fallback-thumbnail"},"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/climatescience.press\/wp-content\/uploads\/2023\/10\/0csm_filler-news-hem-offshore-wind-sector1_c38fe95f3b.jpg?fit=1200%2C632&ssl=1","jetpack_likes_enabled":true,"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/paxLW1-1c45","jetpack-related-posts":[{"id":282409,"url":"https:\/\/climatescience.press\/?p=282409","url_meta":{"origin":284709,"position":0},"title":"Four NY offshore projects ask for almost 50% price\u00a0rise","author":"uwe.roland.gross","date":"08\/10\/2023","format":false,"excerpt":"From NOT A LOT OF PEOPLE KNOW THAT By Paul Homewood We already know that some developers have pulled out of offshore wind projects off the US NE coast, as they are not viable. 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The wind is clean and free. 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